Geography can shape opportunity. Joe Biden wants to change that.
Editor’s note: On March 9, 2018, Vice President Joe Biden addressed Northwestern University’s Kellogg School of Management in a speech geared towards America’s fast-growing economic inequity. Addressing factors from workers’ rights to geographic inequality, Vice President Biden discussed common-sense policy solutions that could help get the country back on track. Below are his remarks in full. Remarks are as prepared and have been lightly edited for clarity.
I come here today to talk about inequity. Not the kind that’s been in the news these days. I’m not talking about wealthy families versus poorer families. I’m here to talk about places.
As you all know, for decades in America, we’ve seen cities and towns moving in different directions, experiencing very different fates. We’ve seen some cities thrive: Silicon Valley hosting the birth of the tech boom. New York defending its perch as the financial capital of the world. Retail and tech in Seattle. Education and innovation in Boston. Houston as the energy capital of the world.
These cities have attracted the best talent America has to offer — the best the world has to offer — as well as massive influxes in capital, generating innovation that has changed the world. Trillions in new wealth, and soaring home values that created nest eggs overnight.
But some places have not thrived. Cities in the South and industrial Midwest that have lost their industry to China and Mexico and new technology. Rural towns that saw their young people leave for the promise of something new. Cities and suburbs across the heart of the country that buckled under the weight of decades of stagnant wages.
If you’ve come from any of these towns, you’ve lived through this. You’ve seen it. You know what I’m saying. You can see it in the faces of the people, still proud, wondering what happened to their shot. You see it with the opioid epidemic, which is decimating whole generations in some towns. It affects everyone.
Empty factories. Empty storefronts. Empty homes. Empty wallets. The underpinnings of this geographic inequality are no mystery — they’ve been in the making for years.
State laws that have undercut unions, stunting the labor movement. A labor market that has hollowed out good middle-class jobs — sales jobs like the one my father had. One million manufacturing jobs lost to China. Cities and regions that bore the pain of globalization so that the rest of the country could reap the benefits.
Today, 75 percent of all venture capital goes to four cities: San Francisco, New York, Boston, and Los Angeles. Everyone else fights for the crumbs.
Falling investments in infrastructure — not just roads and bridges, but ports, waterways, airports, and rail. Long-lasting under-investments in training and education — not just four-year schools, but community colleges and job training programs.
States walking away from their commitment to educate the next generation. Over the past decade, 44 states have cut funding for higher ed — some by as much as half — causing rising tuitions, and putting college out of reach for tens of thousands of people.
A tax system which rewarded companies for keeping billions abroad and shifting operations overseas. Tax cuts for companies that shifted their operations abroad to make products designed right here in the United States in foreign factories. Tax breaks for investors and special interests that put investors at a huge advantage over workers.
The continuing result: These inland cities and rural towns become poorer, reversing a trend that had been in place for 100 years.
In the century between 1880 and 1980, poorer states were catching up to richer states at 1.8 percent a year. Prosperity was in their grasp. But about forty years ago, this switched. Poorer areas started losing ground. Unemployment was consistently higher in the poorer areas, and wages stopped growing. Investment dried up. Capital started flowing back to the cities and towns with the most resources.
Today, 75 percent of all venture capital goes to four cities: San Francisco, New York, Boston, and Los Angeles. Everyone else fights for the crumbs. It’s often a tough life for people in these long-depressed places. But it’s not just about the livelihoods of the working families who live there. It’s about the chances of the kids who are coming out of these places.
The poor kid in San Francisco has twice the chance of making a top income as one born in Detroit. Twice the chance. It’s like they were born in different countries.
Folks, it’s not that kids born in San Francisco are smarter or harder-working than kids in Detroit. Kids from cities like San Francisco, Boston, and San Jose come from less segregated communities. There is less income inequality, allowing them to see success around them.
Their school systems are better funded. Social networks are stronger, and more people are taking part in their communities. There are more kids being raised by both parents.
These kids have support from families and schools. This isn’t new. This birth lottery has been around for decades. But income inequality is making it worse. Being stuck at the bottom is a tougher struggle than it used to be.
But I’m not here to talk about the reasons for this inequality. I’m here to talk about how to get these cities and towns back on track.
I can tell you what won’t work: An infrastructure package designed only to privatize our nation’s roads and transit systems. A tax cut which puts us $1.9 trillion in the hole, while producing almost no growth. Deregulation which erodes competitive labor markets and makes it nearly impossible for workers to get a raise. Starting a new trade war that kills jobs for our exporters. Ripping health care away from people who otherwise could not afford it.
All these things make the problem worse. We have options.
Here’s what we need to do:
We have to make these places more competitive by getting rid of laws that stifle competition. Most people don’t realize nearly 40 percent of workers will be subject to a non-compete agreement at some point. Not just engineers with trade secrets, but sandwich makers, pest control workers — even people selling pet food.
We need to drop unnecessary occupational licensing laws. Let me give you an extreme example: In Oklahoma, you need 600 hours of training just to braid hair. And we need to make those licenses that are necessary transferable from one state to the next, that’s a big issue. This will eliminate the need to spend months in a new location, just to be able to do the work you do well. These laws often mean that workers can’t move to take a higher-paying job in another state, or that they have to spend months just to get certified to go to work.
We need to outlaw policies that punish workers just for talking about wages. Today, one-quarter of workers are in a workplace where they can’t even talk about what they make without retribution. That’s got to end.
If you can’t leave your job for a better one, there’s little chance you’ll see a meaningful raise. Only 15 states outlaw employers from retaliating against workers who talk about pay. It should be 50. That’s not capitalism. It’s outrageous.
We need to prevent companies from denying hourly workers overtime by mislabeling them as management. It’s wrong. These laws and practices crush workers’ bargaining power.
We need policies that get capital flowing to the whole county, not just for select cities. One idea is to create a fund for states to plow money into entrepreneurship, offering grants for states that pass laws to encourage innovation. And allowing states to distribute the money on their own terms.
We need to support laws that allow labor unions to flourish and fight for basic worker protections. I don’t see how we get the Midwest back on track without unions. I know that might not be popular in the halls of a business school, but I believe it in my heart.
We need to fight for fair trade policy. We have put to put our businesses on equal footing. This means aggressively enforcing our trade laws. Retaliation for those countries — like China — that illegally subsidize their companies. The rampant theft of American intellectual property — over $200 billion stolen by China alone.
We need a tax code that recognizes that investors are not the only engine of growth. The economy depends on labor, just like it needs the capital from investors. We need a fair code that puts workers and investors on equal footing.
We need to have a 21st-century infrastructure in America. The American Society of Civil Engineers give America’s infrastructure a grade of D-plus and say that we need to invest $4.6 trillion to fix the problems with it. If we hope to win, we need real, straightforward investments in infrastructure.
And we need to make sure that the construction workers who are rebuilding our infrastructure are paid fairly for their labor, with prevailing wages. Prevailing wages increase the earnings of construction workers by 16 to 17 percent annually and reduce the number of those workers living in poverty by 30 percent.
Broadband to towns that technology forgot. Water systems that allow you to turn on the tap without fear of poisoning your kids. Our water infrastructure is so behind that we still have major cities across the country with wooden water pipes and mains.
President Obama and I proposed a plan to boost transportation spending by $478 billion. Congress balked. But it would have raised spending for highways by over $100 billion, made our roads safer, and reduced the cost of shipping goods to ports.
And it would have boosted federal transit spending by 70 percent — connecting long-forgotten communities to the commercial centers of cities.
We need to have a 21st-century infrastructure in America.
For the first time in decades, we are seeing life expectancy dropping for some groups. Suicide. Alcohol. Opioids. It’s devastating. We have got to address these epidemics that are both a symptom and a cause. Every one-percent increase in unemployment raises opioid deaths in a community by almost 4 percent. We’ll start seeing drops in deaths of despair when we start providing opportunity.
But we also have to take it head-on. We have got to have federal dollars going to proven programs, like court diversion programs, to fight this awful epidemic and provide people with the second shot they deserve.
We need to preserve Obamacare. It’s the only way people in some of these communities can practically get health care. You’re not going to see families flourish if they’re worrying about whether they can take their kid to the doctor.
These policies would have real, tangible benefits for American families. It would raise their standard of living. Not just wages, but quality of life. Being able to send your kid to the park without worrying that they’d come home safely. Knowing that you’re able to send your kid to a decent school. Affordable health care when you need it. Stable communities when you know your neighbors.
Let me talk about education for a minute. If we started a system today, does anyone think we should stop at 12 years? We need free community college for everyone.
The wage boost for getting an associate degree is $9,000, every single year. A lot of families need this raise. We can do it without raising the deficit.
Free community college costs $6 billion a year. If we cut the loophole known as stepped-up basis — which taxes investments at 0 percent if investors hold them when they die — we can raise $30 billion a year. That more than pays for free community college and provides billions to pay down the debt.
An equitable tax system. Congress just cut the corporate tax rate. That’s a good thing — I’m behind a lower rate, too. But we need to take care of workers, also. We need to distinguish between tax cuts which are productive, which boost growth, and those that are just corporate giveaways.
It’s not just lower tax rates, but real support for child care. President Obama and I proposed tripling the child care tax credit to $3,000. This has two positive impacts. One, if you have two kids, that’s an extra $4,000 to pay for child care expenses. Two, it puts parents back in the workplace. Increasing productivity. Generating more economic activity. These are the things we should be doing.
It’s simple. Tax expenditures are historically on one of two grounds. They provide a social good. Charitable contributions. Homeownership. Or, they boost productivity. Child care. Tax credits for education. It’s not that we can’t afford these things. It’s that we’re rewarding sections of the economy that are doing nothing to increase productivity.
The capitalist system is all about being able to compete and bargain. So how do you justify a non-compete clause for hourly sandwich makers? How do you justify no-poaching agreements that prevent one franchise from hiring away workers at higher wages?
This is what capitalism is all about. How do you justify taking hourly wage earners, not managers at all, and reclassifying them to deny $1.2 billion in wages? Just to go to shareholders. How can you justify disallowing coworkers to talk about what they make? What possible rationale is there for that — other than keeping wages low?
A competitive labor market where workers can bargain for what they’re worth. Getting rid of the things I mentioned earlier: No-poaching agreements. Non-competes. Classifying workers as managers so that they can’t get overtime. Not allowing workers to talk about wages.
I believe companies should be given free rein to compete, but I think workers deserve a free rein to compete, too. To bargain their skill to the highest bidder. If they could, workers would see their wages grow by thousands of dollars a year if their salary was in line with their productivity.
There was a famous play: A Funny Thing Happened on the Way to the Forum. Well, a funny thing happened on the way to productivity. Between 1948 and 1973, productivity grew 97 percent and wages grew 91 percent. Almost one for one. But then, 1973, to 2016, productivity went up 74 percent. But pay, only 12 percent.
As I said before, there used to be a basic bargain, signed on by Democrats and Republicans alike, that if you contributed to the productivity of the enterprise you worked with, you got to share in the benefits. No wonder people are so cynical.
How can you justify disallowing coworkers to talk about what they make? What possible rationale is there for that — other than keeping wages low?
Health care — Obamacare goes to the communities that need it the most. Dropping Obamacare would leave 32 million people without health insurance who now have it, and double the cost of premiums for people without access to employer insurance. I’m not just talking about the poor. It’s the middle class. I thought we ended the debate whether basic health care was a right or a privilege. I was wrong. I think it’s a right.
And then we need a plan to reduce opioid deaths. Everybody in both parties says we have to do something about the opioid epidemic. Killing over 35,000 Americans every year. And yet, the Republican proposal is to cut the one mechanism available to us that can reduce these deaths: Medicaid. So much for dealing with the crisis.
Folks, we can afford to do all the things I said here — by reordering our priorities, punishing no one, and allowing us to rebuild our families and communities.
This is within our power. If we do these things we’re giving that kid in Detroit, Indianapolis, Atlanta a better shot than the one they have now. And much closer to the shot as the kid from San Francisco, Boston, or San Jose.
As the great historian Richard Hofstader wrote in 1955, “One of the primary tests of the mood of a society at any given time is whether its comfortable people identify, psychologically, with the power and achievements of the very successful, or with the needs and sufferings of the underprivileged.”
We should be aware. Folks. I’m hopeful. I’m optimistic. I know we can do this. We’ve done it before. We can do it again. Just look at Detroit. A city that got off its back onto its knees with the good leadership of its great mayor and is regaining its confidence and growing again. Attracting young talent as well as capital.
And of late, we’ve seen the business community begin to once again take hold and drive many of the best changes around the country. We see Larry Fink, who oversees trillions in wealth at BlackRock, call on companies to act in the best interests of their communities, not just shareholders.
We’ve seen CEOs acting once again as part of communities, not apart from communities. Taking stands on guns and on LGBTQ rights. There is a whole movement of the leading CEOs to begin to change the corporate culture and acknowledge they have responsibilities in the communities in which they live. There is a new movement to begin to change the corporate culture. Which in my view, and theirs, has gotten out of whack in the past 25 years.
We’ve seen business leaders stand up for sound immigration policies, and stand up for human rights in the process. Business is leading again. And I applaud CEOs around the country for pushing change forward.
I have never been more optimistic in my entire career than I am today. I have never been more optimistic about America’s ability to lead the world — politically, economically, militarily — than I am today.
It’s time to get up, pick our heads up, and remember who we are. We are the United States of America. There is nothing we are incapable of doing.